East West Bancorp Reports Net Income for Third Quarter of 2023 of $288 Million and Diluted Earnings Per Share of $2.02; Record Third Quarter Revenue and Net Interest Income

PASADENA, Calif., October 19, 2023--(BUSINESS WIRE)--East West Bancorp, Inc. ("East West" or the "Company") (Nasdaq: EWBC), parent company of East West Bank, reported its financial results for the third quarter of 2023. Third quarter 2023 net income was $288 million, or $2.02 per diluted share. Total loans reached a record $50.9 billion as of September 30, 2023. Return on average assets was 1.66%, return on average common equity was 17.28%, and return on average tangible common equity¹ was 18.65%.

"East West has continued to grow and support its customers. During the third quarter, we drove record quarterly revenue and net interest income, adding to record net income in the first half of this year," said Dominic Ng, Chairman and Chief Executive Officer of East West. "We took a prudent approach to growth, adding a billion dollars in both loans and customer deposits. This growth and our industry-leading efficiency underscore the durable and diversified nature of our business model," continued Ng.

"Our balance sheet positions us well to help our customers thrive. East West Bank is on track for another year of record earnings for 2023, and we look forward to entering 2024 with strength. Given our confidence in earnings generation, stable credit quality, and capital strength, East West’s board of directors has approved a restart of our share repurchase program in the fourth quarter," Ng concluded.

FINANCIAL HIGHLIGHTS

		Quarter Ended		Quarter Ended		Year-over-Year Change
($ in millions, except per share data)		September 30, 2023		September 30, 2022		$		%
Revenue		$648		$627		$20		3%
Pre-tax, Pre-provision Income2		446		432		14		3
Net Income		288		295		(8)		(3)
Diluted Earnings per Share		$2.02		$2.08		$(0.06)		(3%)
Return on Average Assets		1.66%		1.86%		-20 bps
Return on Average Common Equity		17.28%		20.30%		-302 bps
Return on Average Tangible Common Equity1		18.65%		22.16%		-351 bps
Total Loans		$50,912		$47,457		$3,455		7%
Total Deposits		55,087		53,857		1,230		2

1		Tangible common equity and return on average tangible common equity are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13.
2		Pre-tax, pre-provision income is a non-GAAP financial measure. See reconciliation of GAAP to non-GAAP financial measures in Table 12.

BALANCE SHEET

• Total Assets – Total assets were $68.3 billion as of September 30, 2023, a decrease of $0.2 billion from $68.5 billion as of June 30, 2023, reflecting increasing balance sheet efficiency.
  
  Third quarter 2023 average interest-earning assets of $65.1 billion were up $1.0 billion, or 2%, from $64.1 billion in the second quarter of 2023, primarily due to an increase of $1.0 billion in average loans outstanding.

• Total Loans – Total loans reached a record $50.9 billion as of September 30, 2023, an increase of $1.1 billion, or 2%, from $49.8 billion as of June 30, 2023. Year-over-year, total loans were up $3.5 billion, or 7%, from $47.5 billion as of September 30, 2022.
  
  Third quarter 2023 average loans of $49.9 billion grew $1.0 billion, or 2%, from the second quarter of 2023. The increase was driven by growth across all our major loan portfolios.

• Total Deposits – Total deposits were $55.1 billion as of September 30, 2023, a decrease of $0.6 billion, or 1%, from $55.7 billion as of June 30, 2023, reflecting a $1.6 billion reduction in wholesale deposits, partially offset by an increase of $1 billion in customer deposits. Noninterest-bearing deposits made up 29% of our total deposits as of September 30, 2023, down from 30% as of June 30, 2023. Year-over-year, total deposits increased $1.2 billion, or 2%, from $53.9 billion as of September 30, 2022.
  
  Third quarter 2023 average deposits of $55.2 billion increased $0.9 billion, or 2%, from the second quarter of 2023. During the third quarter, growth in average money market and time deposits was offset by declines in other deposit categories, which largely reflected our commercial and consumer customers reallocating balances to products with higher yields.

• Strong Capital Levels – As of September 30, 2023, stockholders’ equity was $6.6 billion, or $46.62 per share, both up 2% quarter-over-quarter. The stockholders’ equity to asset ratio was 9.66% as of September 30, 2023, an increase of 23 basis points quarter-over-quarter.
  
  As of September 30, 2023, tangible book value³ per share was $43.29, up 2% quarter-over-quarter and 18% year-over-year. The tangible common equity ratio³ was 9.03%, an increase of 23 basis points quarter-over-quarter.
  
  All of East West’s regulatory capital ratios are well in excess of regulatory requirements for well-capitalized institutions, as well as above regional and national bank averages. The common equity tier 1 ("CET1") capital ratio increased to 13.30%, and the total risk-based capital ratio increased to 14.74%, as of September 30, 2023.

OPERATING RESULTS

Third Quarter Earnings – Third quarter 2023 net income was $288 million, and diluted earnings per share ("EPS") were $2.02. While third quarter 2023 net income and EPS both decreased from the second quarter of 2023, revenue and pre-tax pre-provision income both improved.

Net income and diluted EPS for the nine months ended September 30, 2023 were $922 million and $6.49, which both increased 17% from the nine months ended September 30, 2022.

3

Tangible book value and the tangible common equity ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13.

Third Quarter 2023 Compared to Second Quarter 2023

Net Interest Income and Net Interest Margin

Net interest income ("NII") totaled $571 million in the third quarter, an increase of 1% from $567 million in the second quarter. Net interest margin ("NIM") of 3.48% declined seven basis points from 3.55% in the second quarter.

• The change in NIM was primarily driven by a higher cost of interest-bearing deposits and changes in the deposit mix in favor of higher-cost customer deposits, partially offset by lower wholesale deposit levels and higher loan volumes and yields.

• The average loan yield was 6.51%, up 18 basis points from the second quarter. The average interest-earning asset yield was 5.87%, up 20 basis points from the second quarter.

• The average cost of funds was 2.59%, up 28 basis points from the second quarter. The average cost of deposits was 2.43%, up 31 basis points from the second quarter.

Noninterest Income

Noninterest income totaled $77 million in the third quarter, a decrease of $2 million, or 2%, from $79 million in the second quarter.

• Fee income⁴ of $67 million was down $2 million, or 3%, from $69 million in the second quarter.

• Interest rate contracts and other derivative income of $11 million was up from $7 million in the second quarter. The change primarily reflected a favorable change in mark-to-market adjustments.

• Other investment income of $2 million was down $2 million from $4 million in the second quarter, reflecting higher recognition of equity valuation marks for Community Reinvestment Act investments during the second quarter.

Noninterest Expense

Noninterest expense totaled $252 million in the third quarter, a decrease of 4% from $262 million in the second quarter. Third quarter noninterest expense consisted of $202 million of adjusted noninterest expense⁵, and $50 million in amortization expenses related to tax credit and other investments and core deposit intangibles.

• Adjusted noninterest expense of $202 million decreased over $3 million, or 2%, from $205 million in the second quarter. This was driven by decreases in consulting expense, compensation and employee benefits, loan related expenses, and occupancy expense.

• The efficiency ratio was 38.9% in the third quarter, compared with 40.6% in the second quarter and the adjusted efficiency ratio⁵ was 31.2% in the third quarter, compared with 31.8% in the second quarter.

TAX RELATED ITEMS

Third quarter 2023 income tax expense was $66 million, and the effective tax rate was 18.6%, compared with 12.7% for the second quarter of 2023. The lower effective tax rate in the second quarter was mainly due to a larger amount of tax credits in renewable energy investments that closed during the second quarter. The effective tax rate for the first nine months of 2023 was 18.6% compared with 22.7% for the first nine months of 2022. We currently estimate that the full year tax rate for 2023 will be between 19% - 20%.

4		Fee income includes lending, deposit account and wealth management fees, foreign exchange income, and interest rate contracts and other derivative income.
5		Adjusted noninterest expense and adjusted efficiency ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 12.

ASSET QUALITY

As of September 30, 2023, the credit quality of our loan portfolio remained solid.

• The nonperforming assets ratio improved to 0.15% of total assets as of September 30, 2023, down from 0.17% of total assets as of June 30, 2023. Nonperforming assets decreased $12 million, or 10%, quarter-over-quarter to $104 million as of September 30, 2023, from $116 million as of June 30, 2023.

• Third quarter 2023 net charge-offs were $18 million, or annualized 0.14% of average loans held-for-investment ("HFI"), compared with $8 million, or annualized 0.06% of average loans HFI, for the second quarter of 2023.

• The criticized loans ratio increased 38 basis points quarter-over-quarter to 2.01% of loans HFI as of September 30, 2023, compared with 1.63% as of June 30, 2023. Criticized loans increased $210 million, or 26%, quarter-over-quarter to $1.0 billion as of September 30, 2023, compared with $812 million as of June 30, 2023. The special mention loans ratio increased 29 basis points quarter-over quarter to 0.95% of loans HFI as of September 30, 2023, compared with 0.66% as of June 30, 2023, and the classified loans ratio increased nine basis points to 1.06%.

• The allowance for loan losses increased to $656 million, or 1.29% of loans HFI, as of September 30, 2023, compared with $635 million, or 1.28% of loans HFI, as of June 30, 2023.

• Third quarter 2023 provision for credit losses was $42 million, compared with $26 million in the second quarter of 2023.

CAPITAL STRENGTH

Capital levels for East West remained strong as of September 30, 2023. All capital ratios expanded quarter-over-quarter and year-over-year. The following table presents the regulatory capital metrics as of September 30, 2023, June 30, 2023 and September 30, 2022.

EWBC Capital
($ in millions)		September 30, 2023 (a)		June 30, 2023 (a)		September 30, 2022 (a)
Risk-Weighted Assets ("RWA") (b)		$52,944		$51,696		$49,266
Risk-based capital ratios:
CET1 capital ratio		13.30%		13.17%		12.27%
Tier 1 capital ratio		13.30%		13.17%		12.27%
Total capital ratio		14.74%		14.60%		13.57%
Leverage ratio		10.15%		10.03%		9.55%
Tangible common equity ratio (c)		9.03%		8.80%		8.35%

(a)		The Company has elected to use the 2020 Current Expected Credit Losses (CECL) transition provision in the calculation of its September 30, 2023, June 30, 2023 and September 30, 2022 regulatory capital ratios. The Company’s September 30, 2023 regulatory capital ratios and RWA are preliminary.
(b)		Under regulatory guidelines, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories based on the nature of the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar value in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWA.
(c)		Tangible common equity ratio is a non-GAAP financial measure. See reconciliation of GAAP to non-GAAP measures in Table 13.

DIVIDEND PAYOUT AND CAPITAL ACTIONS

East West’s Board of Directors has declared fourth quarter 2023 dividends for the Company’s common stock. The common stock cash dividend of $0.48 per share is payable on November 15, 2023, to stockholders of record on November 1, 2023.

On March 3, 2020, East West’s Board of Directors authorized the repurchase of up to $500 million of East West’s common stock, of which $254 million remains available. East West did not repurchase any shares during the third quarter of 2023. The Company intends to resume share repurchases in the fourth quarter of 2023.

Conference Call

East West will host a conference call to discuss third quarter 2023 earnings with the public on Thursday, October 19, 2023, at 8:30 a.m. PT/11:30 a.m. ET. The public and investment community are invited to listen as management discusses third quarter 2023 results and operating developments.

• The following dial-in information is provided for participation in the conference call: calls within the U.S. – (877) 506-6399; calls within Canada – (855) 669-9657; international calls – (412) 902-6699.

• A presentation to accompany the earnings call will be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.

• A listen-only live broadcast of the call will also be available on the Investor Relations page of the Company’s website at www.eastwestbank.com/investors.

• A replay of the conference call will be available on October 19, 2023, at 11:30 a.m. PT/2:30 p.m. ET through November 19, 2023. The replay numbers are: within the U.S. – (877) 344-7529; within Canada – (855) 669-9658; international calls – (412) 317-0088; and the replay access code is: 8920769.

About East West

East West provides financial services that help customers reach further and connect to new opportunities. East West Bancorp, Inc. is a public company (Nasdaq: "EWBC") with total assets of $68.3 billion as of September 30, 2023. The Company’s wholly-owned subsidiary, East West Bank, is the largest independent bank headquartered in Southern California, and operates over 120 locations in the United States and Asia. The Bank’s markets in the United States include California, Georgia, Illinois, Massachusetts, Nevada, New York, Texas, and Washington. For more information on East West, visit www.eastwestbank.com.

Forward-Looking Statements

Certain matters set forth herein (including any exhibits hereto) contain forward-looking statements that are intended to be covered by the safe harbor provisions for such statements provided by the Private Securities Litigation Reform Act of 1995. In addition, the Company may make forward-looking statements in other documents that it files with, or furnishes to, the U.S. Securities and Exchange Commission ("SEC") and management may make forward-looking statements to analysts, investors, media members and others. Forward-looking statements are those that do not relate to historical facts and that are based on current assumptions, beliefs, estimates, expectations and projections, many of which, by their nature, are inherently uncertain and beyond the Company’s control. Forward-looking statements may relate to various matters, including the Company’s financial condition, results of operations, plans, objectives, future performance, business or industry, and usually can be identified by the use of forward-looking words, such as "anticipates," "assumes," "believes," "can," "continues," "could," "estimates," "expects," "forecasts," "goal," "intends," "likely," "may," "might," "objective," "plans," "potential," "projects," "remains," "should," "target," "trend," "will," "would," or similar expressions or variations thereof, and the negative thereof, but these terms are not the exclusive means of identifying such statements. You should not place undue reliance on forward-looking statements, as they are subject to risks and uncertainties, including, but not limited to, those described below. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make.

There are various important factors that could cause future results to differ materially from historical performance and any forward-looking statements. Factors that might cause such differences, include, but are not limited to: changes in the global economy, including an economic slowdown, capital or financial market disruption, supply chain disruption, level of inflation, interest rate environment, housing prices, employment levels, rate of growth and general business conditions, which could result in, among other things, reduced demand for loans, reduced availability of funding or increased funding costs, declines in asset values and/or recognition of allowance for credit losses; changes in local, regional and global business, economic and political conditions and geopolitical events, such as Russia’s invasion of Ukraine; the soundness of other financial institutions and the impacts related to or resulting from recent bank failures and other economic and industry volatility, including potential increased regulatory requirements, Federal Deposit Insurance Corporation ("FDIC") insurance premiums and assessments, losses in the value of our investment portfolio, deposit withdrawals, or other adverse consequences of negative market perceptions of the banking industry or the Company; changes in laws or the regulatory environment, including regulatory reform initiatives and policies of the U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System ("Federal Reserve"), the FDIC, the SEC, the Consumer Financial Protection Bureau ("CFPB"), the California Department of Financial Protection and Innovation — Division of Financial Institutions, China’s National Administration of Financial Regulation, the Hong Kong Monetary Authority, the Hong Kong Securities and Futures Commission, and the Monetary Authority of Singapore; changes and effects thereof in trade, monetary and fiscal policies and laws, including the ongoing trade, economic and political disputes between the U.S. and the People’s Republic of China and the monetary policies of the Federal Reserve; changes in the commercial and consumer real estate markets; changes in consumer or commercial spending, savings and borrowing habits, and patterns and behaviors; the impact from potential changes to income tax laws and regulations, federal spending and economic stimulus programs; the impact of any future U.S. federal government shutdown and uncertainty regarding the U.S. federal government’s debt limit and credit rating; the Company’s ability to compete effectively against financial institutions and other entities, including as a result of emerging technologies; the success and timing of the Company’s business strategies; the Company’s ability to retain key officers and employees; the impact on the Company’s funding costs, net interest income and net interest margin from changes in key variable market interest rates, competition, regulatory requirements and the Company’s product mix; changes in the Company’s costs of operation, compliance and expansion; the Company’s ability to adopt and successfully integrate new technologies into its business in a strategic manner; the impact of communications or technology disruption, failure in, or breach of, the Company’s operational or security systems or infrastructure, or those of third party vendors with which the Company does business, including as a result of cyber-attacks; and other similar matters which could result in, among other things, confidential and/or proprietary information being disclosed or misused, and materially impact the Company’s ability to provide services to its clients; the adequacy of the Company’s risk management framework, disclosure controls and procedures and internal control over financial reporting; future credit quality and performance, including the Company’s expectations regarding future credit losses and allowance levels; the impact of adverse changes to the Company’s credit ratings from major credit rating agencies; the impact of adverse judgments or settlements in litigation; the impact on the Company’s operations due to political developments, pandemics, wars, civil unrest, terrorism or other hostilities that may disrupt or increase volatility in securities or otherwise affect business and economic conditions; heightened regulatory and governmental oversight and scrutiny of the Company’s business practices, including dealings with consumers; the impact of reputational risk from negative publicity, fines, penalties and other negative consequences from regulatory violations, legal actions and the Company’s interactions with business partners, counterparties, service providers and other third parties; the impact of regulatory investigations and enforcement actions; changes in accounting standards as may be required by the Financial Accounting Standards Board ("FASB") or other regulatory agencies and their impact on the Company’s critical accounting policies and assumptions; the Company’s capital requirements and its ability to generate capital internally or raise capital on favorable terms; the impact on the Company’s liquidity due to changes in the Company’s ability to receive dividends from its subsidiaries; any strategic acquisitions or divestitures; changes in the equity and debt securities markets; fluctuations in the Company’s stock price; fluctuations in foreign currency exchange rates; the impact of increased focus on social, environmental and sustainability matters, which may affect the Company’s operations as well as those of its customers and the economy more broadly; and the impact of climate change, natural or man-made disasters or calamities, such as wildfires, droughts, hurricanes, flooding and earthquakes or other events that may directly or indirectly result in a negative impact on the Company’s financial performance.

For a more detailed discussion of some of the factors that might cause such differences, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 under the heading Item 1A. Risk Factors and the information set forth under Item 1A. Risk Factors in the Company’s Quarterly Reports on Form 10-Q. You should treat forward-looking statements as speaking only as of the date they are made and based only on information then actually known to the Company. The Company does not undertake, and specifically disclaims any obligation to update or revise any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ and shares in thousands, except per share data)
(unaudited)
Table 1
														September 30, 2023 % or Basis Point Change
		September 30, 2023				June 30, 2023				September 30, 2022				Qtr-o-Qtr				Yr-o-Yr
Assets
Cash and due from banks		$	495,976			$	614,053			$	554,260			(19.2	)%			(10.5	)%
Interest-bearing cash with banks			4,065,202				5,763,834				1,609,093			(29.5	)			152.6
Cash and cash equivalents			4,561,178				6,377,887				2,163,353			(28.5	)			110.8
Interest-bearing deposits with banks			17,213				17,169				630,543			0.3				(97.3	)
Assets purchased under resale agreements ("resale agreements")			785,000				635,000				892,986			23.6				(12.1	)
Available-for-sale ("AFS") debt securities (amortized cost of $6,976,331, $6,820,569 and $6,771,354)			6,039,837				5,987,258				5,906,090			0.9				2.3
Held-to-maturity ("HTM") debt securities, at amortized cost (fair value of $2,308,048, $2,440,484 and $2,459,135)			2,964,235				2,975,933				3,012,667			(0.4	)			(1.6	)
Loans held-for-sale ("HFS")			4,762				2,830				14,500			68.3				(67.2	)
Loans held-for-investment ("HFI") (net of allowance for loan losses of $655,523, $635,400 and $582,517)			50,251,661				49,192,964				46,859,738			2.2				7.2
Investments in qualified affordable housing partnerships, tax credit and other investments, net			901,559				815,471				725,254			10.6				24.3
Goodwill			465,697				465,697				465,697			—				—
Operating lease right-of-use assets			97,782				100,500				105,411			(2.7	)			(7.2	)
Other assets			2,200,534				1,961,972				1,799,822			12.2				22.3
Total assets		$	68,289,458			$	68,532,681			$	62,576,061			(0.4	)%			9.1	%
Liabilities and Stockholders’ Equity
Deposits		$	55,087,031			$	55,658,786			$	53,857,362			(1.0	)%			2.3	%
Short-term borrowings			4,500,000				4,500,000				—			—				100.0
Federal funds purchased			—				—				200,000			—				(100.0	)
FHLB advances			—				—				324,920			—				(100.0	)
Assets sold under repurchase agreements ("repurchase agreements")			—				—				611,785			—				(100.0	)
Long-term debt and finance lease liabilities			153,087				152,951				152,610			0.1				0.3
Operating lease liabilities			107,695				110,383				113,477			(2.4	)			(5.1	)
Accrued expenses and other liabilities			1,844,939				1,648,864				1,655,239			11.9				11.5
Total liabilities			61,692,752				62,070,984				56,915,393			(0.6	)			8.4
Stockholders’ equity			6,596,706				6,461,697				5,660,668			2.1				16.5
Total liabilities and stockholders’ equity		$	68,289,458			$	68,532,681			$	62,576,061			(0.4	)%			9.1	%
Book value per share		$	46.62			$	45.67			$	40.17			2.1	%			16.1	%
Tangible book value (1) per share		$	43.29			$	42.33			$	36.80			2.3				17.6
Number of common shares at period-end			141,486				141,484				140,918			0.0				0.4
Total stockholders’ equity to assets ratio			9.66	%			9.43	%			9.05	%		23		bps		61		bps
Tangible common equity ("TCE") ratio (1)			9.03	%			8.80	%			8.35	%		23		bps		68		bps

(1)

Tangible book value and the TCE ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
TOTAL LOANS AND DEPOSITS DETAIL
($ in thousands)
(unaudited)
Table 2
														September 30, 2023 % Change
		September 30, 2023				June 30, 2023				September 30, 2022				Qtr-o-Qtr			Yr-o-Yr
Loans:
Commercial:
Commercial and industrial ("C&I")		$	15,864,042			$	15,670,084			$	15,625,072			1.2	%		1.5	%
Commercial real estate ("CRE"):
CRE			14,667,378				14,373,385				13,573,157			2.0			8.1
Multifamily residential			4,900,097				4,764,180				4,559,302			2.9			7.5
Construction and land			798,190				781,068				556,894			2.2			43.3
Total CRE			20,365,665				19,918,633				18,689,353			2.2			9.0
Consumer:
Residential mortgage:
Single-family residential			12,836,558				12,308,613				10,855,345			4.3			18.3
Home equity lines of credit ("HELOCs")			1,776,665				1,862,928				2,184,924			(4.6	)		(18.7	)
Total residential mortgage			14,613,223				14,171,541				13,040,269			3.1			12.1
Other consumer			64,254				68,106				87,561			(5.7	)		(26.6	)
Total loans HFI (1)			50,907,184				49,828,364				47,442,255			2.2			7.3
Loans HFS			4,762				2,830				14,500			68.3			(67.2	)
Total loans (1)			50,911,946				49,831,194				47,456,755			2.2			7.3
Allowance for loan losses			(655,523	)			(635,400	)			(582,517	)		3.2			12.5
Net loans (1)		$	50,256,423			$	49,195,794			$	46,874,238			2.2			7.2
Deposits:
Noninterest-bearing demand		$	16,169,072			$	16,741,099			$	21,645,394			(3.4	)%		(25.3	)%
Interest-bearing checking			7,689,289				8,348,587				6,822,343			(7.9	)		12.7
Money market			12,613,827				11,486,473				12,113,292			9.8			4.1
Savings			1,963,766				2,102,850				2,917,770			(6.6	)		(32.7	)
Time deposits			16,651,077				16,979,777				10,358,563			(1.9	)		60.7
Total deposits		$	55,087,031			$	55,658,786			$	53,857,362			(1.0	)%		2.3	%

(1)

Includes $(72.0) million, $(74.0) million and $(60.3) million of net deferred loan fees and net unamortized premiums as of September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 3
		Three Months Ended												September 30, 2023 % Change
		September 30, 2023				June 30, 2023				September 30, 2022				Qtr-o-Qtr		Yr-o-Yr
Interest and dividend income		$	961,787			$	906,134			$	628,236			6.1%		53.1%
Interest expense			390,974				339,388				76,427			15.2		411.6
Net interest income before provision for credit losses			570,813				566,746				551,809			0.7		3.4
Provision for credit losses			42,000				26,000				27,000			61.5		55.6
Net interest income after provision for credit losses			528,813				540,746				524,809			(2.2)		0.8
Noninterest income			76,752				78,631				75,552			(2.4)		1.6
Noninterest expense			252,014				261,789				215,973			(3.7)		16.7
Income before income taxes			353,551				357,588				384,388			(1.1)		(8.0)
Income tax expense			65,813				45,557				89,049			44.5		(26.1)
Net income		$	287,738			$	312,031			$	295,339			(7.8)%		(2.6)%
Earnings per share ("EPS")
- Basic		$	2.03			$	2.21			$	2.10			(7.8)%		(3.0)%
- Diluted		$	2.02			$	2.20			$	2.08			(7.9)		(2.6)
Weighted-average number of shares outstanding
- Basic			141,485				141,468				140,917			0.0%		0.4%
- Diluted			142,122				141,876				142,011			0.2		0.1
		Three Months Ended												September 30, 2023 % Change
		September 30, 2023				June 30, 2023				September 30, 2022				Qtr-o-Qtr		Yr-o-Yr
Noninterest income:
Lending fees		$	20,312			$	20,901			$	20,289			(2.8)%		0.1%
Deposit account fees			22,622				22,285				23,636			1.5		(4.3)
Interest rate contracts and other derivative income			11,208				7,373				8,761			52.0		27.9
Foreign exchange income			12,334				13,251				10,083			(6.9)		22.3
Wealth management fees			5,877				6,889				8,903			(14.7)		(34.0)
Net (losses) gains on sales of loans			(12	)			(7	)			2,129			71.4		NM
Other investment income (losses)			1,751				4,003				(580	)		(56.3)		NM
Other income			2,660				3,936				2,331			(32.4)		14.1
Total noninterest income		$	76,752			$	78,631			$	75,552			(2.4)%		1.6%
Noninterest expense:
Compensation and employee benefits		$	123,153			$	124,937			$	127,580			(1.4)%		(3.5)%
Occupancy and equipment expense			15,353				16,088				15,920			(4.6)		(3.6)
Deposit insurance premiums and regulatory assessments			8,583				8,262				4,875			3.9		76.1
Deposit account expense			11,585				10,559				6,707			9.7		72.7
Data processing			3,645				3,213				3,725			13.4		(2.1)
Computer software expense			8,116				7,479				6,889			8.5		17.8
Other operating expense			31,885				35,337				30,403			(9.8)		4.9
Amortization of tax credit and other investments			49,694				55,914				19,874			(11.1)		150.0
Total noninterest expense		$	252,014			$	261,789			$	215,973			(3.7)%		16.7%
NM - Not meaningful.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ and shares in thousands, except per share data)
(unaudited)
Table 4
		Nine Months Ended							September 30, 2023 % Change
		September 30, 2023				September 30, 2022			Yr-o-Yr
Interest and dividend income		$	2,703,427			$	1,560,019		73.3%
Interest expense			966,007				119,645		NM
Net interest income before provision for credit losses			1,737,420				1,440,374		20.6
Provision for credit losses			88,000				48,500		81.4
Net interest income after provision for credit losses			1,649,420				1,391,874		18.5
Noninterest income			215,361				233,739		(7.9)
Noninterest expense			732,250				602,283		21.6
Income before income taxes			1,132,531				1,023,330		10.7
Income tax expense			210,323				232,010		(9.3)
Net income		$	922,208			$	791,320		16.5%
EPS
- Basic		$	6.52			$	5.59		16.6%
- Diluted		$	6.49			$	5.55		17.0
Weighted-average number of shares outstanding
- Basic			141,356				141,453		(0.1)%
- Diluted			142,044				142,601		(0.4)
		Nine Months Ended							September 30, 2023 % Change
		September 30, 2023				September 30, 2022			Yr-o-Yr
Noninterest income:
Lending fees		$	61,799			$	59,869		3.2%
Deposit account fees			66,610				66,323		0.4
Interest rate contracts and other derivative income			21,145				29,695		(28.8)
Foreign exchange income			38,245				34,143		12.0
Wealth management fees			19,070				21,494		(11.3)
Net (losses) gains on sales of loans			(41	)			5,968		NM
Net (losses) gains on AFS debt securities			(10,000	)			1,306		NM
Other investment income			7,675				5,910		29.9
Other income			10,858				9,031		20.2
Total noninterest income		$	215,361			$	233,739		(7.9)%
Noninterest expense:
Compensation and employee benefits		$	377,744			$	357,213		5.7%
Occupancy and equipment expense			47,028				46,853		0.4
Deposit insurance premiums and regulatory assessments			24,755				14,519		70.5
Deposit account expense			31,753				17,071		86.0
Data processing			10,205				10,876		(6.2)
Computer software expense			22,955				20,755		10.6
Other operating expense (1)			102,092				86,243		18.4
Amortization of tax credit and other investments			115,718				48,753		137.4
Total noninterest expense		$	732,250			$	602,283		21.6%

NM - Not meaningful.
(1)		Includes $3.9 million of repurchase agreements’ extinguishment cost for the nine months ended September 30, 2023.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED AVERAGE BALANCES
($ in thousands)
(unaudited)
Table 5
		Three Months Ended									September 30, 2023 % Change				Nine Months Ended						September 30, 2023 % Change
		September 30, 2023			June 30, 2023			September 30, 2022			Qtr-o-Qtr		Yr-o-Yr		September 30, 2023			September 30, 2022			Yr-o-Yr
Loans:
Commercial:
C&I		$	15,400,172		$	15,244,826		$	15,282,661		1.0%		0.8%		$	15,348,662		$	14,850,849		3.4%
CRE:
CRE			14,453,014			14,130,811			13,533,482		2.3		6.8			14,174,100			12,958,562		9.4
Multifamily residential			4,798,360			4,685,786			4,531,351		2.4		5.9			4,695,473			4,133,975		13.6
Construction and land			807,906			782,541			532,800		3.2		51.6			755,651			467,731		61.6
Total CRE			20,059,280			19,599,138			18,597,633		2.3		7.9			19,625,224			17,560,268		11.8
Consumer:
Residential mortgage:
Single-family residential			12,548,593			12,014,513			10,676,022		4.4		17.5			11,997,671			9,809,549		22.3
HELOCs			1,816,900			1,928,208			2,216,355		(5.8)		(18.0)			1,931,105			2,230,060		(13.4)
Total residential mortgage			14,365,493			13,942,721			12,892,377		3.0		11.4			13,928,776			12,039,609		15.7
Other consumer			63,917			65,035			81,870		(1.7)		(21.9)			67,181			97,794		(31.3)
Total loans (1)		$	49,888,862		$	48,851,720		$	46,854,541		2.1%		6.5%		$	48,969,843		$	44,548,520		9.9%
Interest-earning assets		$	65,051,461		$	64,061,569		$	59,478,689		1.5%		9.4%		$	63,545,257		$	58,949,457		7.8%
Total assets		$	68,936,786		$	67,497,367		$	63,079,444		2.1%		9.3%		$	67,196,590		$	62,361,618		7.8%
Deposits:
Noninterest-bearing demand		$	16,302,296		$	16,926,937		$	22,423,633		(3.7)%		(27.3)%		$	17,633,922		$	23,244,247		(24.1)%
Interest-bearing checking			8,080,025			8,434,655			6,879,632		(4.2)		17.4			7,675,325			6,747,711		13.7
Money market			12,180,806			10,433,839			12,351,571		16.7		(1.4)			11,295,157			12,526,222		(9.8)
Savings			2,013,246			2,200,124			2,961,634		(8.5)		(32.0)			2,215,102			2,954,098		(25.0)
Time deposits			16,621,683			16,289,320			9,435,063		2.0		76.2			15,993,669			8,596,728		86.0
Total deposits		$	55,198,056		$	54,284,875		$	54,051,533		1.7%		2.1%		$	54,813,175		$	54,069,006		1.4%
Interest-bearing liabilities		$	43,563,947		$	42,026,844		$	32,703,323		3.7%		33.2%		$	40,826,548		$	31,631,865		29.1%
Stockholders’ equity		$	6,604,798		$	6,440,996		$	5,772,638		2.5%		14.4%		$	6,411,250		$	5,765,637		11.2%

(1)

Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 6
		Three Months Ended
		September 30, 2023										June 30, 2023
		Average							Average			Average							Average
		Balance				Interest			Yield/Rate (1)			Balance				Interest			Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with banks		$	5,392,795			$	67,751		4.98	%		$	5,247,755			$	60,995		4.66	%
Resale agreements			648,587				4,460		2.73	%			641,939				3,969		2.48	%
AFS debt securities			6,074,119				57,177		3.73	%			6,257,397				56,292		3.61	%
HTM debt securities			2,967,703				12,601		1.68	%			2,983,780				12,678		1.70	%
Loans (2)			49,888,862				818,719		6.51	%			48,851,720				771,264		6.33	%
FHLB and FRB stock			79,395				1,079		5.39	%			78,978				936		4.75	%
Total interest-earning assets		$	65,051,461			$	961,787		5.87	%		$	64,061,569			$	906,134		5.67	%
Noninterest-earning assets:
Cash and due from banks			544,939										569,227
Allowance for loan losses			(629,229	)									(619,868	)
Other assets			3,969,615										3,486,439
Total assets		$	68,936,786									$	67,497,367
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Checking deposits		$	8,080,025			$	54,285		2.67	%		$	8,434,655			$	49,571		2.36	%
Money market deposits			12,180,806				113,217		3.69	%			10,433,839				86,419		3.32	%
Savings deposits			2,013,246				4,047		0.80	%			2,200,124				3,963		0.72	%
Time deposits			16,621,683				166,747		3.98	%			16,289,320				147,524		3.63	%
Federal funds purchased and other short-term borrowings			4,501,327				49,575		4.37	%			4,500,566				49,032		4.37	%
FHLB advances			1				—		—	%			1				—		—	%
Repurchase agreements			13,897				193		5.51	%			15,579				211		5.43	%
Long-term debt and finance lease liabilities			152,962				2,910		7.55	%			152,760				2,668		7.01	%
Total interest-bearing liabilities		$	43,563,947			$	390,974		3.56	%		$	42,026,844			$	339,388		3.24	%
Noninterest-bearing liabilities and stockholders’ equity:
Demand deposits			16,302,296										16,926,937
Accrued expenses and other liabilities			2,465,745										2,102,590
Stockholders’ equity			6,604,798										6,440,996
Total liabilities and stockholders’ equity		$	68,936,786									$	67,497,367
Interest rate spread									2.31	%									2.43	%
Net interest income and net interest margin						$	570,813		3.48	%						$	566,746		3.55	%

(1)		Annualized.
(2)		Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 7
		Three Months Ended
		September 30, 2023										September 30, 2022
		Average							Average			Average							Average
		Balance				Interest			Yield/Rate (1)			Balance				Interest			Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with banks		$	5,392,795			$	67,751		4.98	%		$	2,287,010			$	9,080		1.58	%
Resale agreements			648,587				4,460		2.73	%			1,037,292				6,769		2.59	%
AFS debt securities			6,074,119				57,177		3.73	%			6,204,729				38,383		2.45	%
HTM debt securities			2,967,703				12,601		1.68	%			3,017,063				12,709		1.67	%
Loans (2)			49,888,862				818,719		6.51	%			46,854,541				560,452		4.75	%
FHLB and FRB stock			79,395				1,079		5.39	%			78,054				843		4.28	%
Total interest-earning assets		$	65,051,461			$	961,787		5.87	%		$	59,478,689			$	628,236		4.19	%
Noninterest-earning assets:
Cash and due from banks			544,939										615,836
Allowance for loan losses			(629,229	)									(566,369	)
Other assets			3,969,615										3,551,288
Total assets		$	68,936,786									$	63,079,444
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Checking deposits		$	8,080,025			$	54,285		2.67	%		$	6,879,632			$	8,493		0.49	%
Money market deposits			12,180,806				113,217		3.69	%			12,351,571				33,101		1.06	%
Savings deposits			2,013,246				4,047		0.80	%			2,961,634				2,268		0.30	%
Time deposits			16,621,683				166,747		3.98	%			9,435,063				25,032		1.05	%
Federal funds purchased and other short-term borrowings			4,501,327				49,575		4.37	%			211,794				1,177		2.20	%
FHLB advances			1				—		—	%			86,243				392		1.80	%
Repurchase agreements			13,897				193		5.51	%			624,821				4,421		2.81	%
Long-term debt and finance lease liabilities			152,962				2,910		7.55	%			152,565				1,543		4.01	%
Total interest-bearing liabilities		$	43,563,947			$	390,974		3.56	%		$	32,703,323			$	76,427		0.93	%
Noninterest-bearing liabilities and stockholders’ equity:
Demand deposits			16,302,296										22,423,633
Accrued expenses and other liabilities			2,465,745										2,179,850
Stockholders’ equity			6,604,798										5,772,638
Total liabilities and stockholders’ equity		$	68,936,786									$	63,079,444
Interest rate spread									2.31	%									3.26	%
Net interest income and net interest margin						$	570,813		3.48	%						$	551,809		3.68	%

(1)		Annualized.
(2)		Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES, YIELDS AND RATES
($ in thousands)
(unaudited)
Table 8
		Nine Months Ended
		September 30, 2023										September 30, 2022
		Average							Average			Average							Average
		Balance				Interest			Yield/Rate (1)			Balance				Interest			Yield/Rate (1)
Assets
Interest-earning assets:
Interest-bearing cash and deposits with banks		$	4,703,843			$	164,393		4.67	%		$	3,175,596			$	17,127		0.72	%
Resale agreements			659,621				12,932		2.62	%			1,588,452				23,705		2.00	%
AFS debt securities			6,146,653				166,666		3.63	%			6,886,268				106,290		2.06	%
HTM debt securities			2,982,284				38,013		1.70	%			2,672,797				33,645		1.68	%
Loans (2)			48,969,843				2,318,369		6.33	%			44,548,520				1,376,978		4.13	%
FHLB and FRB stock			83,013				3,054		4.92	%			77,824				2,274		3.91	%
Total interest-earning assets		$	63,545,257			$	2,703,427		5.69	%		$	58,949,457			$	1,560,019		3.54	%
Noninterest-earning assets:
Cash and due from banks			578,144										656,772
Allowance for loan losses			(617,381	)									(551,818	)
Other assets			3,690,570										3,307,207
Total assets		$	67,196,590									$	62,361,618
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Checking deposits		$	7,675,325			$	127,030		2.21	%		$	6,747,711			$	13,073		0.26	%
Money market deposits			11,295,157				275,738		3.26	%			12,526,222				45,196		0.48	%
Savings deposits			2,215,102				11,679		0.70	%			2,954,098				5,836		0.26	%
Time deposits			15,993,669				428,120		3.58	%			8,596,728				40,266		0.63	%
Federal funds purchased and other short-term borrowings			3,284,663				107,432		4.37	%			93,370				1,427		2.04	%
FHLB advances			164,836				6,430		5.22	%			128,137				1,529		1.60	%
Repurchase agreements			45,080				1,456		4.32	%			433,340				8,855		2.73	%
Long-term debt and finance lease liabilities			152,716				8,122		7.11	%			152,259				3,463		3.04	%
Total interest-bearing liabilities		$	40,826,548			$	966,007		3.16	%		$	31,631,865			$	119,645		0.51	%
Noninterest-bearing liabilities and stockholders’ equity:
Demand deposits			17,633,922										23,244,247
Accrued expenses and other liabilities			2,324,870										1,719,869
Stockholders’ equity			6,411,250										5,765,637
Total liabilities and stockholders’ equity		$	67,196,590									$	62,361,618
Interest rate spread									2.53	%									3.03	%
Net interest income and net interest margin						$	1,737,420		3.66	%						$	1,440,374		3.27	%

(1)		Annualized.
(2)		Includes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
SELECTED RATIOS
(unaudited)
Table 9
		Three Months Ended (1)									September 30, 2023 Basis Point Change
		September 30, 2023			June 30, 2023			September 30, 2022			Qtr-o-Qtr			Yr-o-Yr
Return on average assets		1.66	%		1.85	%		1.86	%		(19	)	bps	(20	)	bps
Adjusted return on average assets (2)		1.66	%		1.85	%		1.86	%		(19	)		(20	)
Return on average common equity		17.28	%		19.43	%		20.30	%		(215	)		(302	)
Adjusted return on average common equity (2)		17.28	%		19.43	%		20.30	%		(215	)		(302	)
Return on average TCE (3)		18.65	%		21.01	%		22.16	%		(236	)		(351	)
Adjusted return on average TCE (3)		18.65	%		21.01	%		22.16	%		(236	)		(351	)
Interest rate spread		2.31	%		2.43	%		3.26	%		(12	)		(95	)
Net interest margin		3.48	%		3.55	%		3.68	%		(7	)		(20	)
Average loan yield		6.51	%		6.33	%		4.75	%		18			176
Yield on average interest-earning assets		5.87	%		5.67	%		4.19	%		20			168
Average cost of interest-bearing deposits		3.45	%		3.09	%		0.86	%		36			259
Average cost of deposits		2.43	%		2.12	%		0.51	%		31			192
Average cost of funds		2.59	%		2.31	%		0.55	%		28			204
Pre-tax, pre-provision profitability ratio (4)		2.56	%		2.61	%		2.72	%		(5	)		(16	)
Adjusted noninterest expense/average assets (4)		1.16	%		1.22	%		1.23	%		(6	)		(7	)
Efficiency ratio		38.92	%		40.56	%		34.43	%		(164	)		449
Adjusted efficiency ratio (4)		31.18	%		31.83	%		31.18	%		(65	)	bps	—		bps
		Nine Months Ended (1)						September 30, 2023 Basis Point Change
		September 30, 2023			September 30, 2022			Yr-o-Yr
Return on average assets		1.83	%		1.70	%		13		bps
Adjusted return on average assets (2)		1.85	%		1.70	%		15
Return on average common equity		19.23	%		18.35	%		88
Adjusted return on average common equity (2)		19.38	%		18.35	%		103
Return on average TCE (3)		20.80	%		20.04	%		76
Adjusted return on average TCE (3)		20.96	%		20.04	%		92
Interest rate spread		2.53	%		3.03	%		(50	)
Net interest margin		3.66	%		3.27	%		39
Average loan yield		6.33	%		4.13	%		220
Yield on average interest-earning assets		5.69	%		3.54	%		215
Average cost of interest-bearing deposits		3.03	%		0.45	%		258
Average cost of deposits		2.06	%		0.26	%		180
Average cost of funds		2.21	%		0.29	%		192
Pre-tax, pre-provision profitability ratio (4)		2.69	%		2.41	%		28
Adjusted noninterest expense/average assets (4)		1.22	%		1.18	%		4
Efficiency ratio		37.50	%		35.98	%		152
Adjusted efficiency ratio (4)		31.15	%		32.98	%		(183	)	bps

(1)		Annualized except for efficiency ratio and adjusted efficiency ratio.
(2)		Adjusted return on average assets and adjusted return on average common equity are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 14.
(3)		Return on average TCE and adjusted return on average TCE are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 13.
(4)		Pre-tax, pre-provision profitability ratio, adjusted noninterest expense/average assets and adjusted efficiency ratio are non-GAAP financial measures. See reconciliation of GAAP to non-GAAP measures in Table 12.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10
				Three Months Ended September 30, 2023
				Commercial								Consumer
				C&I				Total CRE				Total Residential Mortgage				Other Consumer				Total
Allowance for loan losses, June 30, 2023				$	375,333			$	202,768			$	56,039			$	1,260			$	635,400
Provision for credit losses on loans		(a)			13,006				22,026				2,648				456				38,136
Gross charge-offs					(7,074	)			(13,879	)			(41	)			(13	)			(21,007	)
Gross recoveries					2,279				503				79				—				2,861
Total net (charge-offs) recoveries					(4,795	)			(13,376	)			38				(13	)			(18,146	)
Foreign currency translation adjustment					133				—				—				—				133
Allowance for loan losses, September 30, 2023				$	383,677			$	211,418			$	58,725			$	1,703			$	655,523

				Three Months Ended June 30, 2023
				Commercial								Consumer
				C&I				Total CRE				Total Residential Mortgage				Other Consumer				Total
Allowance for loan losses, March 31, 2023				$	376,325			$	188,915			$	52,978			$	1,675			$	619,893
Provision for (reversal of) credit losses on loans		(a)			5,259				16,076				3,057				(367	)			24,025
Gross charge-offs					(7,335	)			(2,366	)			(6	)			(48	)			(9,755	)
Gross recoveries					2,065				143				10				—				2,218
Total net (charge-offs) recoveries					(5,270	)			(2,223	)			4				(48	)			(7,537	)
Foreign currency translation adjustment					(981	)			—				—				—				(981	)
Allowance for loan losses, June 30, 2023				$	375,333			$	202,768			$	56,039			$	1,260			$	635,400

				Three Months Ended September 30, 2022
				Commercial								Consumer
				C&I				Total CRE				Total Residential Mortgage				Other Consumer				Total
Allowance for loan losses, June 30, 2022				$	363,282			$	173,479			$	25,060			$	1,449			$	563,270
Provision for credit losses on loans		(a)			9,575				11,163				6,281				255				27,274
Gross charge-offs					(6,894	)			(6,226	)			(775	)			(10	)			(13,905	)
Gross recoveries					7,172				71				21				—				7,264
Total net recoveries (charge-offs)					278				(6,155	)			(754	)			(10	)			(6,641	)
Foreign currency translation adjustment					(1,386	)			—				—				—				(1,386	)
Allowance for loan losses, September 30, 2022				$	371,749			$	178,487			$	30,587			$	1,694			$	582,517

EAST WEST BANCORP, INC. AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES & OFF-BALANCE-SHEET CREDIT EXPOSURES
($ in thousands)
(unaudited)
Table 10 (continued)
				Nine Months Ended September 30, 2023
				Commercial								Consumer
				C&I				Total CRE				Total Residential Mortgage				Other Consumer				Total
Allowance for loan losses, December 31, 2022				$	371,700			$	182,346			$	40,039			$	1,560			$	595,645
Impact of ASU 2022-02 adoption					5,683				343				2				—				6,028
Allowance for loan losses, January 1, 2023				$	377,383			$	182,689			$	40,041			$	1,560			$	601,673
Provision for credit losses on loans		(a)			17,587				44,123				18,727				244				80,681
Gross charge-offs					(16,309	)			(16,251	)			(138	)			(101	)			(32,799	)
Gross recoveries					5,555				857				95				—				6,507
Total net charge-offs					(10,754	)			(15,394	)			(43	)			(101	)			(26,292	)
Foreign currency translation adjustment					(539	)			—				—				—				(539	)
Allowance for loan losses, September 30, 2023				$	383,677			$	211,418			$	58,725			$	1,703			$	655,523

				Nine Months Ended September 30, 2022
				Commercial								Consumer
				C&I				Total CRE				Total Residential Mortgage				Other Consumer				Total
Allowance for loan losses, December 31, 2021				$	338,252			$	180,808			$	20,595			$	1,924			$	541,579
Provision for (reversal of) credit losses on loans		(a)			37,867				3,640				10,628				(140	)			51,995
Gross charge-offs					(18,322	)			(7,304	)			(968	)			(90	)			(26,684	)
Gross recoveries					16,688				1,343				332				—				18,363
Total net charge-offs					(1,634	)			(5,961	)			(636	)			(90	)			(8,321	)
Foreign currency translation adjustment					(2,736	)			—				—				—				(2,736	)
Allowance for loan losses, September 30, 2022				$	371,749			$	178,487			$	30,587			$	1,694			$	582,517

				Three Months Ended											Nine Months Ended
				September 30, 2023				June 30, 2023			September 30, 2022				September 30, 2023			September 30, 2022
Unfunded Credit Facilities
Allowance for unfunded credit commitments, beginning of period (1)				$	29,728			$	27,741		$	24,304			$	26,264		$	27,514
Provision for (reversal of) credit losses on unfunded credit commitments		(b)			3,864				1,975			(274	)			7,319			(3,495	)
Foreign currency translation adjustment					(3	)			12			11				6			22
Allowance for unfunded credit commitments, end of period (1)				$	33,589			$	29,728		$	24,041			$	33,589		$	24,041
Provision for credit losses		(a)+(b)		$	42,000			$	26,000		$	27,000			$	88,000		$	48,500

(1)

Included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheet.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
CRITICIZED LOANS, NONPERFORMING ASSETS AND CREDIT QUALITY RATIOS
($ in thousands)
(unaudited)
Table 11
Criticized Loans		September 30, 2023				June 30, 2023				September 30, 2022
Special mention loans		$	483,428			$	330,741			$	470,964
Classified loans			538,258				481,051				434,242
Total criticized loans (1)		$	1,021,686			$	811,792			$	905,206
Nonperforming Assets		September 30, 2023				June 30, 2023				September 30, 2022
Nonaccrual loans:
Commercial:
C&I		$	49,147			$	61,879			$	47,988
Total CRE			16,431				20,598				11,209
Consumer:
Total residential mortgage			37,986				33,032				23,309
Other consumer			136				24				37
Total nonaccrual loans			103,700				115,533				82,543
Nonperforming loans HFS			—				—				14,500
Total nonperforming assets		$	103,700			$	115,533			$	97,043
Credit Quality Ratios		September 30, 2023				June 30, 2023				September 30, 2022
Annualized quarterly net charge-offs to average loans HFI			0.14	%			0.06	%			0.06	%
Special mention loans to loans HFI			0.95	%			0.66	%			0.99	%
Classified loans to loans HFI			1.06	%			0.97	%			0.92	%
Criticized loans to loans HFI			2.01	%			1.63	%			1.91	%
Nonperforming assets to total assets			0.15	%			0.17	%			0.16	%
Nonaccrual loans to loans HFI			0.20	%			0.23	%			0.17	%
Allowance for loan losses to loans HFI			1.29	%			1.28	%			1.23	%

(1)

Excludes loans HFS.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 12
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Adjusted efficiency ratio represents adjusted noninterest expense divided by adjusted revenue. Pre-tax, pre-provision profitability ratio represents total adjusted revenue less adjusted noninterest expense, divided by average total assets. Adjusted revenue excludes the write-off of an AFS debt security (where applicable). Adjusted noninterest expense excludes the amortization of tax credit and other investments, the amortization of core deposit intangibles and the repurchase agreements’ extinguishment cost (where applicable). Management believes that the measures and ratios presented below provide clarity to financial statement users regarding the ongoing performance of the Company and allow comparability to prior periods.
				Three Months Ended												Nine Months Ended
				September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Net interest income before provision for credit losses		(a)		$	570,813			$	566,746			$	551,809			$	1,737,420			$	1,440,374
Total noninterest income					76,752				78,631				75,552				215,361				233,739
Total revenue		(b)		$	647,565			$	645,377			$	627,361			$	1,952,781			$	1,674,113
Noninterest income					76,752				78,631				75,552				215,361				233,739
Add: Write-off of AFS debt security					—				—				—				10,000				—
Adjusted noninterest income		(c)			76,752				78,631				75,552				225,361				233,739
Adjusted revenue		(a)+(c) = (d)		$	647,565			$	645,377			$	627,361			$	1,962,781			$	1,674,113
Total noninterest expense		(e)		$	252,014			$	261,789			$	215,973			$	732,250			$	602,283
Less: Amortization of tax credit and other investments					(49,694	)			(55,914	)			(19,874	)			(115,718	)			(48,753	)
Amortization of core deposit intangibles					(441	)			(440	)			(485	)			(1,322	)			(1,484	)
Repurchase agreements’ extinguishment cost					—				—				—				(3,872	)			—
Adjusted noninterest expense		(f)		$	201,879			$	205,435			$	195,614			$	611,338			$	552,046
Efficiency ratio		(e)/(b)			38.92	%			40.56	%			34.43	%			37.50	%			35.98	%
Adjusted efficiency ratio		(f)/(d)			31.18	%			31.83	%			31.18	%			31.15	%			32.98	%
Pre-tax, pre-provision income		(d)-(f) = (g)		$	445,686			$	439,942			$	431,747			$	1,351,443			$	1,122,067
Average total assets		(h)		$	68,936,786			$	67,497,367			$	63,079,444			$	67,196,590			$	62,361,618
Pre-tax, pre-provision profitability ratio (1)		(g)/(h)			2.56	%			2.61	%			2.72	%			2.69	%			2.41	%
Adjusted noninterest expense/average assets (1)		(f)/(h)			1.16	%			1.22	%			1.23	%			1.22	%			1.18	%

(1)

Annualized.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ in thousands)
(unaudited)
Table 13
The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible book value, tangible book value per share and TCE ratio are non-GAAP financial measures. Tangible book value and tangible assets represent stockholders’ equity and total assets, respectively, which have been reduced by goodwill and other intangible assets. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.
				September 30, 2023				June 30, 2023				September 30, 2022
Stockholders’ equity		(a)		$	6,596,706			$	6,461,697			$	5,660,668
Less: Goodwill					(465,697	)			(465,697	)			(465,697	)
Other intangible assets (1)					(5,649	)			(6,418	)			(8,667	)
Tangible book value		(b)		$	6,125,360			$	5,989,582			$	5,186,304
Number of common shares at period-end		(c)			141,486				141,484				140,918
Book value per share		(a)/(c)		$	46.62			$	45.67			$	40.17
Tangible book value per share		(b)/(c)		$	43.29			$	42.33			$	36.80
Total assets		(d)		$	68,289,458			$	68,532,681			$	62,576,061
Less: Goodwill					(465,697	)			(465,697	)			(465,697	)
Other intangible assets (1)					(5,649	)			(6,418	)			(8,667	)
Tangible assets		(e)		$	67,818,112			$	68,060,566			$	62,101,697
Total stockholders’ equity to assets ratio		(a)/(d)			9.66	%			9.43	%			9.05	%
TCE ratio		(b)/(e)			9.03	%			8.80	%			8.35	%

Return on average TCE represents tangible net income divided by average tangible book value. Adjusted return on average TCE represents adjusted tangible net income divided by average tangible book value. Tangible net income excludes the after-tax impacts of the amortization of core deposit intangibles and mortgage servicing assets. Adjusted tangible net income excludes the after-tax impacts of the tangible net income adjustments and the write-off of an AFS debt security. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.
				Three Months Ended												Nine Months Ended
				September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Net income		(e)		$	287,738			$	312,031			$	295,339			$	922,208			$	791,320
Add: Amortization of core deposit intangibles					441				440				485				1,322				1,484
Amortization of mortgage servicing assets					328				342				340				1,026				1,096
Tax effect of amortization adjustments (2)					(225	)			(230	)			(237	)			(688	)			(742	)
Tangible net income		(f)		$	288,282			$	312,583			$	295,927			$	923,868			$	793,158
Add: Write-off of AFS debt security					—				—				—				10,000				—
Tax effect of write-off (2)					—				—				—				(2,929	)			—
Adjusted tangible net income		(g)		$	288,282			$	312,583			$	295,927			$	930,939			$	793,158
Average stockholders’ equity		(h)		$	6,604,798			$	6,440,996			$	5,772,638			$	6,411,250			$	5,765,637
Less: Average goodwill					(465,697	)			(465,697	)			(465,697	)			(465,697	)			(465,697	)
Average other intangible assets (1)					(6,148	)			(6,921	)			(8,379	)			(6,916	)			(8,801	)
Average tangible book value		(i)		$	6,132,953			$	5,968,378			$	5,298,562			$	5,938,637			$	5,291,139
Return on average common equity (3)		(e)/(h)			17.28	%			19.43	%			20.30	%			19.23	%			18.35	%
Return on average TCE (3)		(f)/(i)			18.65	%			21.01	%			22.16	%			20.80	%			20.04	%
Adjusted return on average TCE (3)		(g)/(i)			18.65	%			21.01	%			22.16	%			20.96	%			20.04	%

(1)		Includes core deposit intangibles and mortgage servicing assets.
(2)		Applied statutory tax rate of 29.29% for the three and nine months ended September 30, 2023, and the three months ended June 30, 2023. Applied statutory tax rate of 28.77% for the three and nine months ended September 30, 2022.
(3)		Annualized.

EAST WEST BANCORP, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
($ and shares in thousands, except for per share data)
(unaudited)
Table 14
During the first quarter of 2023, the Company recorded a $10.0 million pre-tax impairment write-off of an AFS debt security. Management believes that presenting the computations of the adjusted net income, adjusted diluted earnings per common share, adjusted return on average assets and adjusted return on average common equity that adjust for the above discussed non-recurring item provide clarity to financial statement users regarding the ongoing performance of the Company and allows comparability to prior periods.
				Three Months Ended												Nine Months Ended
				September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Net income		(a)		$	287,738			$	312,031			$	295,339			$	922,208			$	791,320
Add: Write-off of AFS debt security					—				—				—				10,000				—
Tax effect of write-off (1)					—				—				—				(2,929	)			—
Adjusted net income		(b)		$	287,738			$	312,031			$	295,339			$	929,279			$	791,320
Diluted weighted-average number of shares outstanding					142,122				141,876				142,011				142,044				142,601
Diluted EPS				$	2.02			$	2.20			$	2.08			$	6.49			$	5.55
Add: Write-off of AFS debt security					—				—				—				0.05				—
Adjusted diluted EPS				$	2.02			$	2.20			$	2.08			$	6.54			$	5.55
Average total assets		(c)		$	68,936,786			$	67,497,367			$	63,079,444			$	67,196,590			$	62,361,618
Average stockholders’ equity		(d)		$	6,604,798			$	6,440,996			$	5,772,638			$	6,411,250			$	5,765,637
Return on average assets (2)		(a)/(c)			1.66	%			1.85	%			1.86	%			1.83	%			1.70	%
Adjusted return on average assets (2)		(b)/(c)			1.66	%			1.85	%			1.86	%			1.85	%			1.70	%
Return on average common equity (2)		(a)/(d)			17.28	%			19.43	%			20.30	%			19.23	%			18.35	%
Adjusted return on average common equity (2)		(b)/(d)			17.28	%			19.43	%			20.30	%			19.38	%			18.35	%

(1)		Applied statutory tax rate of 29.29% for the three and the nine months ended September 30, 2023, and the three months ended June 30, 2023. Applied statutory tax rate of 28.77% for the three and nine months ended September 30, 2022.
(2)		Annualized.

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Contacts

Christopher Del Moral-Niles, CFA
Chief Financial Officer
T: (626) 768-6860
E: chris.delmoralniles@eastwestbank.com

Adrienne Atkinson
Director of Investor Relations
T: (626) 788-7536
E: adrienne.atkinson@eastwestbank.com